Delegated Proof of Stake

Delegated proof of stake, or DPoS, is a consensus mechanism in which token holders vote for a limited set of block producers — often between twenty and a few hundred — who take turns creating blocks on everyone's behalf. Voting weight is proportional to the tokens staked, and producers who go offline or misbehave can be voted out or penalised by the protocol. Concentrating block production in a small elected group delivers faster confirmations and lower fees than fully open proof of stake, at a clear cost in decentralisation: a handful of large holders or exchanges can dominate the vote. Delegating usually does not transfer custody of your coins, but lock-up periods, reward splits and penalties differ by network.